Cosan has struck a BRL896.5m ($525.7m) deal to acquire 5.7% of railroad operator America Latina Logistica (ALL), paying a premium to enter the controlling group of a key piece of Brazil’s agricultural transportation infrastructure. The Brazilian sugar and ethanol producer is set to purchase 38.98m shares of ALL from shareholders Riccardo and Julia Arduini and Global Investment Partners. According to Barclays Capital, the per share price represents a 104% premium over ALL’s previous close. “As we become part of the shareholder’s [controlling block] agreement, the premium we pay today will be a good investment. It is important to be close to the decisions of this group,” Marcelo Martins, Cosan’s CFO, said in a conference call. Officials highlighted the existing relationship between Cosan and ALL in the Rumo transportation venture. They note there are important improvements that can be made at ALL, whose railroad system is the primary means to get Cosan products to Southeastern Brazilian ports. The acquisition is to be paid for in cash, though officials note Cosan is studying the possibility of putting its new ALL stake into an SPV that could take on additional investors, and possibly issue debt and make other acquisitions. New equity at this level is not an option, they say. The offer values ALL at BRL15.7bn, or an implied enterprise value to 2011 Ebitda of 10.5x taking last year’s BRL1.49bn Ebitda figure at year-end. Barclays puts the EV/Ebitda multiple at 11.8x, using an Ebitda calculated for the last 12 months, and points out that comparable transactions in the industry have usually gone for 7.5x to 15.0x EV/ LTM Ebitda. The shop adds that the deal is a credit positive since it diversifies the company’s revenues away from commodities and offers Cosan bondholders exposure to Brazil’s railroad business. The deal depends on the approval of regulators and shareholders. No outside advisors were used, Cosan officials say on the call. Cosan says 34.00m of the 38.98m share
Category: M&A
Irish Renewable Power Inks Chilean Wind Deal
Irish renewable energy developer Mainstream Renewable Power (MRP), has struck a deal with Chinese wind turbine manufacturer Xinjiang Goldwind Science & Technology to build the Ckani wind farm in Chile. The 50/50 deal involves the initial building stages of the wind farm to be located in the Antofagasta region in northern Chile, MRP says. As agreed, a subsidiary of the Chinese company will supply 47 of its GW87 1.5 MW capacity wind turbines for the venture. Officials at Mainstream and Goldwind could not be reached for comment for additional details. The Ckani farm, as designed, has a potential generating capacity of 240MW which is expected to be fully operational by 2015. Late last year, the two companies struck an earlier deal where Mainstream bought 23 of Goldwind’s turbines to supply Chile’s Negrete Cuel wind farm.
KOF Eyes Coke’s Philippines Bottler
Mexico’s Coca-Cola Femsa (KOF) has struck an exclusivity agreement with Coca-Cola to analyze the possible acquisition of a majority stake in Coca-Cola’s bottling operations in the Philippines. The deal is good for 12 months, KOF says, but does not guarantee that a transaction will occur. Officials at KOF and Coca-Cola could not immediately be reached for comment. The agreement comes as the Mexican bottler is working to consolidate its position in the Latin American soft-drink bottling business. Such an acquisition would mark its first move outside LatAm. KOF and competing Mexican Coke bottler Arca Continental have been purchasing independent bottlers in Mexico and others in Latin America in a buying spree that is expected to continue over the coming year.
Mexico’s Genomma Faces Heat in US Bid
A poor market reaction and a possible legal challenge confronted Mexican pharmaceutical marketer Genomma Lab following a bid to acquire Prestige Brands Holdings (PBH), a healthcare and house cleaning products company in the US. Genomma’s shares lost 9.41% Tuesday, following the announcement of an offer to pay $16.60 per common share, or $834m, for PBH. The acquisition would also mean assuming the company’s outstanding debt of $891m, according to Janney Capital Markets. Genomma made the offer to PBH’s board and also revealed the details publicly to Prestige shareholders, a move that has cast doubt on the amicable terms of the deal. Others question its thinking. “It doesn’t make sense. Their strategy is Mexico and Latin America. It’s difficult to see what they would bring to the table here,” says an equity analyst who covers Genomma. He notes that its US operations involve marketing its existing products to Hispanics, but managing Prestige’s brands would involve new products in a broader market with different characteristics. The offer represents a 23% premium over PBH’s closing price on Friday and is 47% higher than the average for the past three months, it says. “Our strong preference is to work with you to negotiate a mutually acceptable transaction and avoid unnecessary costs,” Genomma’s chief, Rodrigo Herrera Aspra, says in the note to PBH shareholders. Herrera adds that Genomma has already received “indications of interest” from banks willing to finance the acquisition. It expects the transaction could close in three weeks if both parties move quickly and willingly. However, Janney Capital Markets calls the transaction “dubious,” and estimates there is only a 50% chance the deal may actually go through, it says in a report. The offer represents an implied 9.5x Ebitda in the best case scenario, it notes. The transaction is also facing a potential class action litigation from apparently dissatisfied PBH shareholders. Law firm Faruqi & Faruqi, which claims to repre
Copec Prepares Proenergia Tender
As part of its ongoing takeover of Colombian fuel distributor Terpel, Compania de Petroleos de Chile (Copec) is set to launch an up to COP540.9bn ($304m) buyback offer to shareholders of Proenergia. Copec holds 56.15% of Proenergia, and is offering holders COP9,280 per share for the remaining 43.85%, or 58.29m shares. The offer is open February 27 through March 9. Copec plans to use its own resources to fund the purchase, and says it has $125m-equivalent in credit guarantees from three Chilean banks. Proenergia controls 52.78% of Sociedad de Inversiones en Energia, which in turn controls Terpel. Copec has already agreed to buy Corficolombiana’s 9.99% stake in Proenergia, it says. Corredores Asociasos is managing the process. Proegnergia shares were at COP8,760 Friday. Copec acquired an initial 47.2% stake in Proenergia when it bought the assets of AEI in Colombia last year.
Mitsubishi Buys 18% in Peruvian Mine
Mitsubishi has purchased an 18.1% stake in the Peruvian Quellaveco copper project from the International Finance Corporation. The acquisition will make Mitsubishi a partner of global miner Anglo American which controls 81.9% of the mine, the company says. It did not disclose the price. Officials at Mitsubishi could not immediately be reached for comment, while an IFC spokesperson declines to offer additional details. The Quellaveco mine is expected to begin production in 2016, and has roughly 10m tons of content metal reserves or a life of 28 years assuming a production of 225,000 tons a year.
Brazilian Exit Multiples Seen Tightening
Exit multiples for private equity plays in Brazil are likely to fall further this year, but in Mexico they should rise, said industry officials Thursday at a Mexican private equity conference organized in New York by the United States-Mexico Chamber of Commerce. Brazil is an overheated market for the asset class, they say. “There is still a large differential between high exit multiples in Brazil and those in Mexico. But already Brazil multiples are down this year,” says Luis Alberto Harvey of Nexxus Capital.” Investors point to Brazil’s weaker real and the fact that the Ibovespa index is down 2.12% from a year ago as reasons for the decline in multiples, compared to Mexico’s Bolsa which has remained relatively flat over the last year.
Elektra Enters US with Payday Loan Buy
Mexico’s Elektra has agreed to buy US payday loan company Advance America in a deal valued at $780m including assumed debt. The purchase marks the Grupo Salinas company’s first step into the financial sector in the US, home to a large Mexican community that sends remittances home to low-income households, which also make up the base of Elektra’s customers. Elektra has offered to pay $10.50 per each Advance America share, or $655.6m, a 33% premium over the $7.91 close the day before the announcement. The purchase is being financed using roughly $300m of Elektra’s own cash and $450m from dollar and peso-denominated debt, a spokesman adds. The company raised $150m in a reopening of its 2018 bonds at the end of January, and he says it plans to issue an additional $300m soon. The $780m price tag for Advance America represents an enterprise value to Ebitda multiple of 6.5x, taking the company’s only available Ebitda up to September 2011 of $120m. “Elektra is paying 1.2x the sales of its new subsidiary, a level that appears adequate considering its operations, the potential for synergies, and the strategic position that Elektra now has in the US,” Gaspar Quijano, an analyst at Vector Casa de Bolsa, tells LatinFinance. He describes the move as “surprising but positive.” The deal should not immediately affect Elektra’s ratings says Fitch, which currently rates the Mexican company’s debt at BB minus. That said, Fitch reckons Elektra’s debt leverage would briefly rise to 2.7x before settling back to 2.5x in the short term. Elektra retained Stephens as a financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison as legal counsel in the deal. Wells Fargo Securities and K&L Gates, served as financial and legal advisors to Advance America. Advance America operates 2,248 centers in the US, as well as limited operations in Canada and the UK.
PDVSA Pays Exxon $252m Compensation
PDVSA has paid ExxonMobil $251.9m as compensation for the assets the global oil major lost to a nationalization campaign in 2007. The payment comes after making some adjustments to the $907.6m figure that the International Chamber of Commerce (ICC) awarded Exxon in its early January ruling, PDVSA says. As agreed, following the ruling, PDVSA planned to discount the amount Exxon owed for the outstanding debt of the nationalized Cerro Negro project in which PDVSA and Exxon worked as partners, an additional $300m that Exxon managed to freeze from PDVSA in a New York account and additional money the tribunal credited to PDVSA’s obligations to Exxon. The ICC ruling fell below the $7bn-$10bn that Exxon originally sought as compensation for its nationalized assets. Despite the payment, however, Exxon has a pending case against Venezuela at ICSID, the arbitration unit of the World Bank. PDVSA has long insisted it would pay only the book value of those assets and not the fair market value that the aggrieved oil companies sought to receive.
BR Malls Adds 33% Mall Stake
BR Malls has acquired a 33% stake in the Itau Power shopping center, cementing its presence in Brazil’s Minas Gerais state. BR Malls will pay BRL85.5m ($51m) for the participation, plus an additional BRL2.3m for one third of the parking operation, the company says. As per BR Malls’ estimation, the mall will likely generate BRL9.8m in net operating income over the coming year. BR Malls and Itau Power officials could not immediately be reached for additional comment. BR Malls estimates the price paid gives it an implied real and unleveraged internal rate of return of 14.2%, and 14.5% with the parking buy. With the deal, BR Malls increases its total gross leasable area to 1.47m square meters.